In researching the steps you need to take to create a sound retirement plan, I'm finding this is more complex than I thought - lots of possible plan designs and levers I could pull. Among the components:

Creating the right bucket portfolios (short, medium, long-term) to produce cash flow for expenses, mitigate risks, ensure a high success probability
Best process of rebalancing
Tax planning, now and after RMD's start (defer to age 70)
Are Roth conversions the right move
When to take Social Security
Longevity annuity?
Covering healthcare costs under son-of-Obamacare until age 65
Long Term Healthcare provision (long term care insurance versus self-fund)[/list][/list]

in looking at where I am, I'm evaluating how I can get help on this, beyond everything I can do on my own. I'm considering using an advisor. I have researched various advisor options and spoken to a bunch of people. My options range from using a fee-only planner to do point-in-time comprehensive plans, to using something like Wealthfront to help manage investments, all the way up to paying a fixed fee or percent of assets-under-management for both comprehensive planning and ongoing investment management. Seems to me that both the "planning" and "execution" part of this is important; one feeds the other, and it needs to be monitored for the inevitable changes that will occur.

My question to fellow Bogleheads: How do you evaluate whether such an cost (for me it would range from $10k-$50k/year) makes sense? The do-it-yourselfer in me says don't spend the money, keep it simple, you can get 80% of the way there on your own. But the thing that scares me is how each of these components interact with each other; pull one lever and it impacts everything else. I'm very analytical, I understand more than the average bear, but I have an uncomfortable sense that this is exceeding my knowledge and that I need someone with more knowledge and especially experience to get this right. I doubt I would make a huge mistake with all this, but it might save me money in the long term to get a really good advisor. A lot at stake.

Perhaps you're where I am today, or a few years down the road. How did you consider this decision? How did you determine whether it was a cost worth incurring? My simple thinking is that it's like subtracting 0.1-0.5% from my returns, and I've been totally fixed on low costs...BUT, there's the other side of what sound planning and execution could SAVE me in the long run when you look at the whole picture.

Would be very interested in others' experience and thoughts.
Thank you.

Worst case scenario: You pull money from non-optimum places to fund retirement, make the wrong choice on annuities and long term care. Would you think that these choices would cost you $50k a year? Because at a $5MM portfolio, a 1% AUM would cost you that much a year.

Sitting down with a fiduciary for a ONE TIME FEE would be MUCH better, in my opinion. But I'd have an agreement up front that you will buy absolutely nothing from him. You are there to get direction of what to do to best meet your goals, not to be sold anything.

A one time fee only consultation should be enough to make sure you are on the right track. I would not enter into an aum fee arrangement, even if it was the low 0.3% that vanguard charges.
Wci has a list of things to look for in an fa.http://whitecoatinvestor.com/the-perfec ... l-advisor/

What would your required annual dollar withdrawal be? I hope to have your problem in 35 years. I like to think I'd be able to make $5M last a lifetime and still grow fairly safely, but sometimes my tastes do get expensive...

mhalley wrote:A one time fee only consultation should be enough to make sure you are on the right track. I would not enter into an aum fee arrangement, even if it was the low 0.3% that vanguard charges.
Wci has a list of things to look for in an fa.http://whitecoatinvestor.com/the-perfec ... l-advisor/

thank you. I actually went to Vanguard for my "free" financial plan (i have most of my money at Vanguard), but I felt it was pretty "basic" - didn't have the full detail I would ideally want. As for investment recommendations, I think they are ok for basic portfolio building and rebalancing strategies - nothing fancy but then again that's what you would expect.

MotoTrojan wrote:What would your required annual dollar withdrawal be? I hope to have your problem in 35 years. I like to think I'd be able to make $5M last a lifetime and still grow fairly safely, but sometimes my tastes do get expensive...

aha...I'm sure you see other posts here about the value of "staying the course." My sense is that there are a ton of "millionaire next door" folks in this forum. I for one started with nothing, worked my way through college, saved like crazy, never bought new cars, lived below my means, avoided stupid debt like the plague, and steadfastly stayed away from the latest trends. Stick with the sound advice you see here and you'll be surprised at how it all builds up - I for sure shake my head when I look at my statement each month. And I will be forever grateful I discovered Jack Bogle's principles oh-so-long-ago.

Just a few years ago I was where you are, although well below $5M. Questioning whether I could continue doing it all myself. I am now retired and continuing to manage my own finances. Here are a few things I did that made me comfortable with DIY in retirement.

I thought long and hard about how much I would need to live on. You can't have a retirement plan until you have an understanding of what you need. Then I looked at any income I would have before touching my portfolio. Primarily Social Security.
Once I had that info, I figured out what the gap was and at that point it was very easy to see that I had reached the point of ENOUGH. In fact, I was well past enough. I didn't need to worry about whether paying someone else to manage my portfolio would make it grow more than I could manage. I didn't need to make it grow more than someone else's portfolio.

To get some outside input about my intentions I got a financial plan done by Vanguard when I transferred my Fidelity 401k into a Vanguard IRA. I also hired a CPA for an hour to take a look at my plan and see if I was making appropriate decisions on the tax planning side. (Did that twice, once a year or so before retirement and again a year or so after.)

You don't seem to be in a position where you need someone to manage your portfolio. Unless your appetites are very large, you have probably reached ENOUGH.You don't need investment advice. You are really looking for trusted advisors who can assure you that the plans you have constructed make sense and maybe suggest alternatives to think about. As others have pointed out, a fee-only financial advisor can do this for you on a one-time or periodic basis. You may also want to find a CPA who is willing to do the kind of plan review I got.

My biggest concern going forward is what I will do as my brain begins to get brittle and maybe I shouldn't be making these kinds of decisions for myself after a certain point. How will I find someone I can trust to execute my plans when I need to let go of the reins?

My impression is you could do this yourself. There is no guarantee anyone you hire will do it better.

Plus, tax laws, rules and regulations can change. Will you revisit any plan developed for you? How often.

I, personally, would never pay an AUM fee.

If you need assistance to sleep well at night, hire a fee based fiduciary to assist you.

As a free alternative, you could prepare questions on the part of your plan you are unsure of and pose them here.

Although no one here is offering "professional" advice, much of the advice is on the market. Almost all of it is good intentioned.

I wish you the best of luck with your decision.

thank you Artisan. some of the advisors I'm finding aren't AUM, charge a flat fee either for (a) a discrete project or (b) for ongoing planning and investment advice depending upon what they believe the "workload" is. I guess I'm still looking at just how much (absolute dollars) I'm willing to spend. $50k is too much but...$15? $20? Trying to quantify the value.

GerryL wrote:Just a few years ago I was where you are, although well below $5M. Questioning whether I could continue doing it all myself. I am now retired and continuing to manage my own finances. Here are a few things I did that made me comfortable with DIY in retirement.

I thought long and hard about how much I would need to live on. You can't have a retirement plan until you have an understanding of what you need. Then I looked at any income I would have before touching my portfolio. Primarily Social Security.
Once I had that info, I figured out what the gap was and at that point it was very easy to see that I had reached the point of ENOUGH. In fact, I was well past enough. I didn't need to worry about whether paying someone else to manage my portfolio would make it grow more than I could manage. I didn't need to make it grow more than someone else's portfolio.

To get some outside input about my intentions I got a financial plan done by Vanguard when I transferred my Fidelity 401k into a Vanguard IRA. I also hired a CPA for an hour to take a look at my plan and see if I was making appropriate decisions on the tax planning side. (Did that twice, once a year or so before retirement and again a year or so after.)

You don't seem to be in a position where you need someone to manage your portfolio. Unless your appetites are very large, you have probably reached ENOUGH.You don't need investment advice. You are really looking for trusted advisors who can assure you that the plans you have constructed make sense and maybe suggest alternatives to think about. As others have pointed out, a fee-only financial advisor can do this for you on a one-time or periodic basis. You may also want to find a CPA who is willing to do the kind of plan review I got.

My biggest concern going forward is what I will do as my brain begins to get brittle and maybe I shouldn't be making these kinds of decisions for myself after a certain point. How will I find someone I can trust to execute my plans when I need to let go of the reins?

Thanks for posting. I hear you when you say "brain begins to get brittle." Some days more neurons are firing than others! We have a couple of trusted relatives we hope to be able to rely on.

Two key things to look for when selecting an advisor are written statements;

1) Stating that they have a fiduciary responsibility to you.

2) A clear explanation of all their compensation. One thing to watch out for is that "fee based" is not the same as "fee only" since they can still take commissions if they are "fee based".

As long as you can get that then deciding if they are worth the cost is up to you or not.

It is a bit separate but you should also have professional estate planning since your net worth is getting to the point where it could trigger estate taxes, especially if your investments grow for a few decades or the tax laws change again and the level where they starts is lower in the future.

One thing to watch out for is that if you pay a 1% fee a year then that needs to come out of the 4% safe withdrawal that academic studies suggest is a safe withdrawal rate to start with in retirement.

This means that at 1% an advisor would be getting 25% of your available income each year. If the advisor used high expense funds or has hidden fees then that would come out of your 4% too.

Unless you can come up with a real compelling reason that you need an advisor for the long term it would best to only use one for a brief time to get your investments to be pretty much on automatic pilot.

I'm really interested in everyones' responses. I sadly have nowhere near $5 M, but like OP am 60, likely to retire in a couple years, and thinking a lot about what kind of professional advice would help me make the best financial decisions.

I'm not interested in an AUM arrangement (did that for a few years with Merrill Lynch, starting in complete ignorance and actually learned a lot from a good financial advisor, until I realized I could do it myself).

I may be completely wrong, but the kind of advice I'd be most willing to pay for would be a fee-only tax planner who could help me during those few years in my 60s when I'll have more flexibility, when I'm no longer earning a salary but before SS and RMDs kick in at 70. There may be several very low income years when I can sell the highly-appreciated index funds in my taxable account and stay in the 15% tax bracket (which I've never been in) to avoid capital gains tax. And should I do any Roth conversions? How do I find the right combination every year of withdrawing from taxable, tax-deferred, and Roth accounts?

I'd be less likely to pay for investment advice. Partly due to fear of cognitive decline, I hope to simplify everything into just a few index funds when I retire and no longer have to have money all over the place, all with different investment options, in 401(k), 401(k) brokerage window, Roth 401(k), Roth, HSA, taxable accounts, etc.

It is very difficult to locate an adviser who has as much involvement and interest in the success of your plan as you yourself would.

Typically advisers will make things appear to be more complicated then it needs to be so that you believe you need to maintain an ongoing relationship with them, at an ongoing fee.

If you've accumulated $5M you've got the drive and smarts to do it yourself.

I didn't come across any mention of a spouse or estate/inheritance issues. Sometimes folks that manage things themselves may involve an adviser (even if it's only Vanguard PAS) for the sake of continuity in the event of their passing to help ease the management of the assets for the beneficiaries.

I think the answer depends on whom you hire and whether you can focus on specific financial decisions, rather than looking for a "big picture" advisor.

I'm 69, retired, and new to Boglehead. When I was 62 and still working, I hired an independent financial advisor for a one-time fee of $600 to review my financial position. I continued to consult with him occasionally until last year. While the advice gave me some reassurance; in the end, it was not worth the cost. OTOH, I have been happy with a different advisor that I used last year for a specific investment - LTC insurance.

One problem was that the advisor I initially hired was not just reviewing my financial situation, he was also pushing products. So, he was getting paid for the review and looking for a commission on investment products that I did not need. And many of my questions went unanswered.

At the initial review, the advisor did not really answer the questions I had: should I start contributing to a Roth account? pay off my mortgage before I retire? put more money into my son's college account? can I afford to retire at age 60? Instead, he recommended I purchase an annuity, which I declined, and he said I could afford to "retire" at age 62 if I took another job.

Two years later, at age 64, I was forced to retire (mass layoff) and I contacted the advisor again. He recommended another review, and I agreed, but I did not realize he would be charging $1500 for the second review. Again, he did not answer many of my questions: should I do a Roth conversion? when should I start taking Social Security? Instead, he recommended that I rollover my 403B accounts (which totaled about $380K at the time) into a managed TIRA with a 1.75% management fee.

I agreed to rollover half my 403B's to a managed account, which I seriously regret. Four years later, the total gain in the managed account was 4% (< 1% growth per year); while the total gain in my self-managed account was 45% (about 10% growth per year). I took over the managed account at the end of last year and I'm happily managing it myself.

Last year I decided to purchase LTC insurance. The initial advisor that I had been using advocated for combining LTC insurance with a transfer of a portion of my TIRA into a longevity insurance contract (a complicated process that would somehow defer a portion of my RMDs until age 85). When I declined the longevity insurance, he said there was no point in my purchasing the LTC without it. So I sought out a different advisor to help me with the LTC purchase.

A question to consider before hiring an advisor: Will you follow their advice? If not, it's like hiring an interior designer for furnishing your home and then dismissing their design and going shopping by yourself at Ikea.

Once you come up with a "game plan" all you do is percentage rebalance to maintain your allocation ratio. So there's no point in paying for an asset manager to constantly hold your hand. If you're taking out 4% per year then keep an eye on your principal level. Adjust withdrawals lower if your portfolio drops below perhaps 80% of the original value.

Creating the right bucket portfolios (short, medium, long-term) to produce cash flow for expenses, mitigate risks, ensure a high success probability
Best process of rebalancing
Tax planning, now and after RMD's start (defer to age 70)
Are Roth conversions the right move
When to take Social Security
Longevity annuity?
Covering healthcare costs under son-of-Obamacare until age 65
Long Term Healthcare provision (long term care insurance versus self-fund)[/list][/list]

I think you are sadly mistaken if you believe that you can hire someone who can do all the above for you better than you can figure it out on your own.

GerryL wrote:
I thought long and hard about how much I would need to live on. You can't have a retirement plan until you have an understanding of what you need.

could you please elaborate on that? I'd like to understand what kind of expenses to expect in retirement. I didn't grow up in US and have limited knowledge about life after retirement here.

aqan,
I've been using Quicken for years to track my spending by categories, so it was fairly simple to figure out where my money was going: groceries, car costs, utilities, etc. If you're not doing that already, you will want to figure that out for at least a year or two before you intend to retire. (You want to be sure to include expenses that hit less than monthly, such as car or home insurance and subscriptions.) It doesn't need to be precise, but it does need to be honest.

Once you have a picture of where your pay is going, you can look at the list and note the expenses and deductions that won't continue in retirement (e.g., 401k contributions) or that are likely to go down. But you then need to consider what costs might go up: do you intend to travel or eat out more often? Take a serious look at healthcare costs, which may well go up even once you are on Medicare. And don't forget taxes -- Federal and state!

Once you have an understanding of what your annual expenses are, you will want to consider other costs you will need to save for even beyond your emergency fund: how often do you intend to get a new car? is your roof going to need to be reshingled in the next 5, 10 years? do you intend to help a young relative with college costs?

Life after retirement in the US is a combination of what you want it to be + how much you've saved. The more you've saved (plus SS and pensions), the more options you have.

I'm 63 same situation. Had accounts and brokerages all over the place. Find a good schwab broker. They will at no fee put a plan together for you. Of course they will try to get you into there managed fee accounts but you don't have to. I still manage and trade myself but they did help make sense of my whole situation and basically reaffirmed what I had been doing was not crazy. Plus if you have a sizable portfolio you get all kinds of perks with them. Got tickets to the MAsters.

I am 40 and I have only 1.2 M.
I am using Schwab CFP service as my Advisor. I had a 2 hour planning session this week with Schwab CFP. My advisor joined Schwab from Vanguard.

Note: You can get advise on all your accounts (Schwab or NON schwab) but to get access to your plan/advisor you need minimum 25K with Schwab with .28 Bps after your 1st consultation which is $70/year (may be this makes no sense for Bogleheads DIY expert folks but I helps a Joe financial novice like myself)

So I opened a 25K account and paying .28 bps for unlimited CFP Advisory services which turns to -- , I am paying $25/hour or less for Schwab Employee CFP Planning Advisor Service) using Intelligent Advise they launched this week.

Dinosaur Dad, I'm in a similar place as you. I recently went thru a review with Schwab- the initial review was more "plain vanilla", than I was looking for. I then prepared a list of questions I was seeking answers on and presented them to my assigned consultant. He then referred me to a Sr. CFP who was able to answer every question in addition to completing a comprehensive financial plan designed for our circumstances (after I completed a comprehensive questionnaire). The plan was geared more towards what you are seeking, and not portfolio advice. The plan was free with a fee waiver from my assigned consultant.

I would go back to the person that did your recent plan, and see if they can fully answer all your questions. Perhaps there may be a planning service offered for a nominal fee that may be what you need.

I agree with others here, that you seem well prepared to do most of this already, and probably only need to confirm issues that may apply to tax optimization, estate planning, social security, etc. If you do seek the services of a fee only planner (by the hour only), I would be crystal clear up front what you are seeking to get, otherwise you may end up with another plan similar to what you have from Vanguard.

For the last 4 years I’ve used a fee-only financial planner. I don’t feel confident, managing my families complete million dollar plus retirement portfolio, without a 3rd party review. It is a totally visible expense. So far they have made recommendations each year that have covered the expense for their services. They are a CFP, they never push a product and I complete all of the transactions.

It seems like you perceive your retirement planning as very complicated, with a need for separate buckets, etc. I really do not see it as complicated. I just made a spreadsheet with rows for each year out to age 100. Then I put in columns for our annual expenses, each of our savings categories (IRA and taxable), all of our income sources (pension, SS, RMDs, tax-exempt interest, 1099-DIV), and taxes. I added some fixed reference cells so I could change estimated CPI and investment return rates.

If the spreadsheet has positive balances in the savings columns at age 100 the plan is good to go.

I think this can be done with no separate buckets and just a simple three fund BH portfolio across all your savings categories, with taxable bonds mostly in your IRAs and few, if any, tax exempt bonds.

I would definitely defer SS until age 70. My guess is that with $5M you can easily self-fund your LTC risk, but you could add a column of potential expenses for LTC and see what it does to your spreadsheet outcomes. I expect your other annual expenses would go down if you move to a long-term care facility full time for the last X years of your life.

For specific other questions like ROTH conversion you can do the up-front research yourself and then post focused questions on the forum as needed. There is a wealth of experience on the forum if you present a clear question on any aspect of your retirement plan.

Dinosaur Dad: I'm in basically the same position as you, financially and age-wise, so I can identify with your feelings. I'm 61 years old (laid off, trying hard to find another job, if only for the health benefits). I have a good bit of money invested in tax exempts, split between the NY Long Term Tax Exempt Fund and the NY Tax Exempt Money Market Fund, to lower the effective duration. Hoping to basically live off interest and dividends for as long as possible while the equity portion continues to grow. But I've been debating whether to engage a financial planner for the first time, just to provide a sanity check. It's very scary not having a salary come in, along with benefits, for the first time in my life.

Nedsaid: It sounds to me like you are a savvy individual. You have done things right and you should be giving us advice! But yes, no matter how much you know there are things that you don't know. We also all suffer from blind spots, an objective person would see in an instant what you cannot see on your own. This is why I do think most investors would benefit from outside advice.

In researching the steps you need to take to create a sound retirement plan, I'm finding this is more complex than I thought - lots of possible plan designs and levers I could pull. Among the components:

Creating the right bucket portfolios (short, medium, long-term) to produce cash flow for expenses, mitigate risks, ensure a high success probability
Best process of rebalancing
Tax planning, now and after RMD's start (defer to age 70)
Are Roth conversions the right move
When to take Social Security
Longevity annuity?
Covering healthcare costs under son-of-Obamacare until age 65
Long Term Healthcare provision (long term care insurance versus self-fund)[/list][/list]

Nedsaid: What you are noticing is that there are pitfalls and disadvantages to just about anything. You are probably noticing that new risks seem to come to your attention all the time and the costs of guarding against those risks might be prohibitive. Your imagination could run wild, like at age 57, I could fall in love with a widow with 10 children! I am being a bit facetious here, but salespersons will try to play on your fears with extreme scenarios. You put together a good plan, cover the bases the best you can, and get objective advice. There is just no perfect retirement plan out there.

You are also noticing that there are complex issues related to retirement. The points above you raised are excellent. What I would do is pay for a planner who charges by the hour to look at these issues and to provide his or her best answers. It is sort of like when you get on an airplane, I feel a bit relieved when I see a pilot with graying, close cropped hair who looks like a retired marine pilot. You want somebody with a lot of experience who has seen a lot of client situations and portfolios. Somebody who has seen the big mistakes that others have made.

in looking at where I am, I'm evaluating how I can get help on this, beyond everything I can do on my own. I'm considering using an advisor. I have researched various advisor options and spoken to a bunch of people. My options range from using a fee-only planner to do point-in-time comprehensive plans, to using something like Wealthfront to help manage investments, all the way up to paying a fixed fee or percent of assets-under-management for both comprehensive planning and ongoing investment management. Seems to me that both the "planning" and "execution" part of this is important; one feeds the other, and it needs to be monitored for the inevitable changes that will occur.

Nedsaid: I would pay somebody by the hour for advice.

My question to fellow Bogleheads: How do you evaluate whether such an cost (for me it would range from $10k-$50k/year) makes sense? The do-it-yourselfer in me says don't spend the money, keep it simple, you can get 80% of the way there on your own. But the thing that scares me is how each of these components interact with each other; pull one lever and it impacts everything else. I'm very analytical, I understand more than the average bear, but I have an uncomfortable sense that this is exceeding my knowledge and that I need someone with more knowledge and especially experience to get this right. I doubt I would make a huge mistake with all this, but it might save me money in the long term to get a really good advisor. A lot at stake.

Nedsaid: If you wanted a portfolio manager, I would pick a firm with a deep bench, preferably with access to DFA funds. I would not want to be dependent on one advisor as something could happen. Advisors change firms, retire, get sick, pass away; all the things that happen to the rest of us.

Another thing you are seeing is that no one person is knowledgeable about all the things you need advice about. Paul Merriman's old firm used to have CPA's and would provide the comprehensive services that you desire but with the 2008-2009 crash, had to cut back and now focus on portfolio management. I think what you are finding is that the comprehensive service, when you can find it, is not cheap.

What you might have to do is do an ala carte approach. Find the best insurance agent or broker you can find, the best CPA, the best lawyer, and the best investment advisor. But alas, that too will cost you some bucks. I can see your frustration.

Perhaps you're where I am today, or a few years down the road. How did you consider this decision? How did you determine whether it was a cost worth incurring? My simple thinking is that it's like subtracting 0.1-0.5% from my returns, and I've been totally fixed on low costs...BUT, there's the other side of what sound planning and execution could SAVE me in the long run when you look at the whole picture.

Nedsaid: My own experience is this. I have been mostly a do-it-yourself investor and I have informed myself best I can on topics like taxes, insurance, investing, budgeting, etc. But I have had my portfolio reviewed several times by different people and each time have learned something new. I work with an independent broker with part of my retirement. I have used a fee only financial advisor. I talk to my insurance agent once a year.

How much advice and/or management is worth is the $64,000 question. What is it worth to you? For me, I would pay as much as 0.50% a year for portfolio management if I had access to DFA funds.

Would be very interested in others' experience and thoughts.
Thank you.

Nedsaid: It sounds to me like you are a savvy individual. You have done things right and you should be giving us advice! But yes, no matter how much you know there are things that you don't know. We also all suffer from blind spots, an objective person would see in an instant what you cannot see on your own. This is why I do think most investors would benefit from outside advice.

In researching the steps you need to take to create a sound retirement plan, I'm finding this is more complex than I thought - lots of possible plan designs and levers I could pull. Among the components:

Creating the right bucket portfolios (short, medium, long-term) to produce cash flow for expenses, mitigate risks, ensure a high success probability
Best process of rebalancing
Tax planning, now and after RMD's start (defer to age 70)
Are Roth conversions the right move
When to take Social Security
Longevity annuity?
Covering healthcare costs under son-of-Obamacare until age 65
Long Term Healthcare provision (long term care insurance versus self-fund)[/list][/list]

Nedsaid: What you are noticing is that there are pitfalls and disadvantages to just about anything. You are probably noticing that new risks seem to come to your attention all the time and the costs of guarding against those risks might be prohibitive. Your imagination could run wild, like at age 57, I could fall in love with a widow with 10 children! I am being a bit facetious here, but salespersons will try to play on your fears with extreme scenarios. You put together a good plan, cover the bases the best you can, and get objective advice. There is just no perfect retirement plan out there.

You are also noticing that there are complex issues related to retirement. The points above you raised are excellent. What I would do is pay for a planner who charges by the hour to look at these issues and to provide his or her best answers. It is sort of like when you get on an airplane, I feel a bit relieved when I see a pilot with graying, close cropped hair who looks like a retired marine pilot. You want somebody with a lot of experience who has seen a lot of client situations and portfolios. Somebody who has seen the big mistakes that others have made.

in looking at where I am, I'm evaluating how I can get help on this, beyond everything I can do on my own. I'm considering using an advisor. I have researched various advisor options and spoken to a bunch of people. My options range from using a fee-only planner to do point-in-time comprehensive plans, to using something like Wealthfront to help manage investments, all the way up to paying a fixed fee or percent of assets-under-management for both comprehensive planning and ongoing investment management. Seems to me that both the "planning" and "execution" part of this is important; one feeds the other, and it needs to be monitored for the inevitable changes that will occur.

Nedsaid: I would pay somebody by the hour for advice.

My question to fellow Bogleheads: How do you evaluate whether such an cost (for me it would range from $10k-$50k/year) makes sense? The do-it-yourselfer in me says don't spend the money, keep it simple, you can get 80% of the way there on your own. But the thing that scares me is how each of these components interact with each other; pull one lever and it impacts everything else. I'm very analytical, I understand more than the average bear, but I have an uncomfortable sense that this is exceeding my knowledge and that I need someone with more knowledge and especially experience to get this right. I doubt I would make a huge mistake with all this, but it might save me money in the long term to get a really good advisor. A lot at stake.

Nedsaid: If you wanted a portfolio manager, I would pick a firm with a deep bench, preferably with access to DFA funds. I would not want to be dependent on one advisor as something could happen. Advisors change firms, retire, get sick, pass away; all the things that happen to the rest of us.

Another thing you are seeing is that no one person is knowledgeable about all the things you need advice about. Paul Merriman's old firm used to have CPA's and would provide the comprehensive services that you desire but with the 2008-2009 crash, had to cut back and now focus on portfolio management. I think what you are finding is that the comprehensive service, when you can find it, is not cheap.

What you might have to do is do an ala carte approach. Find the best insurance agent or broker you can find, the best CPA, the best lawyer, and the best investment advisor. But alas, that too will cost you some bucks. I can see your frustration.

Perhaps you're where I am today, or a few years down the road. How did you consider this decision? How did you determine whether it was a cost worth incurring? My simple thinking is that it's like subtracting 0.1-0.5% from my returns, and I've been totally fixed on low costs...BUT, there's the other side of what sound planning and execution could SAVE me in the long run when you look at the whole picture.

Nedsaid: My own experience is this. I have been mostly a do-it-yourself investor and I have informed myself best I can on topics like taxes, insurance, investing, budgeting, etc. But I have had my portfolio reviewed several times by different people and each time have learned something new. I work with an independent broker with part of my retirement. I have used a fee only financial advisor. I talk to my insurance agent once a year.

How much advice and/or management is worth is the $64,000 question. What is it worth to you? For me, I would pay as much as 0.50% a year for portfolio management if I had access to DFA funds.

Would be very interested in others' experience and thoughts.
Thank you.

thank you nedsaid for a thoughtful and informed comment. The idea of using a "buffet" of services, paying only for what I really need, makes sense if you can find someone really good to partner with, and you have the ability to synthesize the various inputs.

Re: DFA, I have read a lot about them and reviews are mostly positive; they seem to have a unique tweak on covering the market with a diversified portfolio - namely, it appears from what I've read that they look to slightly overweight certain sectors (e.g. small cap value) to boost overall return, and they adjust holdings to cover the various indices without paying premiums (e.g. when a stock gets added to the s&p, it sounds like they may wait until the price comes down a little). I'm sure there's more to it to that of course - DFA's growth certainly indicates that a lot of people have faith in them. There are some do-it-yourself approaches that tilt in this direction (e.g. Paul Merriman portfolios), but I again happily admit that DFA knows a lot more about this than I do! The $64,000 question is, again, does the costs of gaining access to DFA via an adviser (along with their technical knowledge on areas like taxes, IRAs, etc) going to boost return above and beyond that fee; even 0.5% on the $5 million adds to a non-inflation-adjusted $250k cost over 10 years ($25k/year times 10 years).

Dinosaur dad, another factor for people to consider is that of cognitive decline. Fortunately, my family does not have a history of such things as Alzheimer's, a great grandmother suffered dementia but other than that family members kept their marbles.

That being said, when one gets into their 80's, most are not at the peak of their mental powers. Even if the spirit is willing, so to speak, the flesh can be weak. Physical ailments can detract from someone's ability to deal with investments and finances.

I have thought about these issues myself. The independent broker that I deal with for part of my retirement is about my age. When I am 85, he will be 84 or so. So that isn't the solution. I could go with a firm that I really respect, but companies and their cultures can change over time. We saw this with Charles Schwab, which was very investor friendly and then started hitting their customers with higher fees. It took the founder getting back involved with the firm to make it more investor friendly again.

At some point, I would like to be able to turn things over and let someone else manage my investments. Perhaps the answer is a Target Risk Fund like Vanguard Moderate Growth LifeStrategy fund. Pick the fund that best meets your risk profile.

I have thought about this. Pretty much find an advisor that you like at a price you are willing to pay. It sounds to me that you have already decided to employ an advisor whether you realize it or not. At some point, you will just have to hold your nose and dive in. Nothing is ever perfect. Even if you are perfectly able to handle all of this until the day you die, you might have a surviving spouse that is not able to.

Certainly, you and your advisor should share a similar investment philosophy. You should agree on a plan before executing it. At some point it is either get with the program or do it yourself. The key is finding the right program. You might have to pay a bit more than what your frugal self wants to pay.

I am thinking about all this stuff myself and have not come to a decision.

nedsaid wrote:I have thought about this. Pretty much find an advisor that you like at a price you are willing to pay. It sounds to me that you have already decided to employ an advisor whether you realize it or not. At some point, you will just have to hold your nose and dive in. Nothing is ever perfect. Even if you are perfectly able to handle all of this until the day you die, you might have a surviving spouse that is not able to.

Certainly, you and your advisor should share a similar investment philosophy. You should agree on a plan before executing it. At some point it is either get with the program or do it yourself. The key is finding the right program. You might have to pay a bit more than what your frugal self wants to pay.

I am thinking about all this stuff myself and have not come to a decision.

Can you guys please help me? I am 40 with only 1M with 401K,529,Taxable, looking for a fee only per hour advisor. I can only afford $200/hr for max 2 hours. How to find a advisor? here are questions I wrote up after reading this thread. can u guys chime in please?

0. If you are trying to sell me products like portfolio-managment for 1% or commissions or insurance product, let's end this call NOW!!!

1. Are you a fiduciary in heart and in writing ?

2. Do you have CFP ? additionally, CFA or CPA ? How many clients do you have now? Your AUM ? DFA Fund access ?

Dinosuar Dad, your concerns are understandable. I've described retirement as suddenly finding yourself on a tightrope with no net below! Of course it's prudent to have knowledge and confidence in what you're doing.

We can answer some of your questions if you provide more specific information. For instance, what is your initial withdrawal rate going to be? What asset allocation would like to have? Here's a link on how to make the information post

In researching the steps you need to take to create a sound retirement plan, I'm finding this is more complex than I thought - lots of possible plan designs and levers I could pull. Among the components:

Creating the right bucket portfolios (short, medium, long-term) to produce cash flow for expenses, mitigate risks, ensure a high success probability <-I think the bucket idea is simply a type of mental accounting. Cash flow? No. Sustainable withdrawals, yes. If you have a reasonable withdrawal rate, it will have a high success rate.
Best process of rebalancing Once a year.
Tax planning, now and after RMD's start (defer to age 70)
Are Roth conversions the right move Depends on taxes and plans for inheritance.
When to take Social Security Wait until at least 66 if possible.
Longevity annuity? Maybe, need additional information to answer this.
Covering healthcare costs under son-of-Obamacare until age 65. Need more detail. HSA?
Long Term Healthcare provision (long term care insurance versus self-fund) Separate discussion[/list][/list]

in looking at where I am, I'm evaluating how I can get help on this, beyond everything I can do on my own. I'm considering using an advisor. I have researched various advisor options and spoken to a bunch of people. My options range from using a fee-only planner to do point-in-time comprehensive plans, to using something like Wealthfront to help manage investments, all the way up to paying a fixed fee or percent of assets-under-management for both comprehensive planning and ongoing investment management. Seems to me that both the "planning" and "execution" part of this is important; one feeds the other, and it needs to be monitored for the inevitable changes that will occur.
Wealthfront may be a good option. And don't forget, you don't have to put all assets under paid management. Your portfolio does not have to be complex, but we really need to see what and where things are to help with that.

My question to fellow Bogleheads: How do you evaluate whether such an cost (for me it would range from $10k-$50k/year) makes sense? The do-it-yourselfer in me says don't spend the money, keep it simple, you can get 80% of the way there on your own. But the thing that scares me is how each of these components interact with each other; pull one lever and it impacts everything else.
Yes, every decision involves some sort of compromise.

I'm very analytical, I understand more than the average bear, but I have an uncomfortable sense that this is exceeding my knowledge and that I need someone with more knowledge and especially experience to get this right. I doubt I would make a huge mistake with all this, but it might save me money in the long term to get a really good advisor. A lot at stake.

OK, you are looking for confirmation. As I mentioned at first, it does seem like a scary task with your entire quality of life riding on what you do. I also felt that way, but it disappears rather quickly.

Perhaps you're where I am today, or a few years down the road. How did you consider this decision? How did you determine whether it was a cost worth incurring? My simple thinking is that it's like subtracting 0.1-0.5% from my returns, and I've been totally fixed on low costs...BUT, there's the other side of what sound planning and execution could SAVE me in the long run when you look at the whole picture.

Would be very interested in others' experience and thoughts.
Thank you.

I think you should consult with a pro, but first go through the routine here to help with what you need to focus on with the planner.

You seem to be very knowledgeable and thoughtful about your finances and retirement plans. I was in a similar position a few years prior to my retirement although my net worth was considerably less than yours. I was confident of managing my finances but I felt paying a really good planner for a retirement plan and advice would be well worth it because retirement was an irreversible decision, and I did not want to screw it up. One of my fears is that I might have tunnel vision about aspects of my planning and a good planner would spot that and make recommendations to remedy it. I am talking more about a CFP type of planner than an investment adviser, someone who can advise on comprehensive retirement things beyond investments like LTC, estates, tax considerations, et al.

I recommend that you engage a fee only planning, someone you are confident can provide the advice needed. Once you establish the relationship, you may find the need to consult with this person again on similar matters, but I do not think you need ongoing advice or an AUM type arrangement.

FWIW, I did a detailed retirement plan with Fidelity which was good for the investment side, but never found a financial planner I was comfortable with to do a comprehensive retirement plan. One mistake I made was taking SS at FRA rather than delaying to 70 which I could have easily done. At the time, there was not a consensus about delaying SS to age 70 as there is now, although had I been a Boglehead in 2010, I might have avoided that mistake.

Dinosuar Dad, your concerns are understandable. I've described retirement as suddenly finding yourself on a tightrope with no net below! Of course it's prudent to have knowledge and confidence in what you're doing.

We can answer some of your questions if you provide more specific information. For instance, what is your initial withdrawal rate going to be? What asset allocation would like to have? Here's a link on how to make the information post

In researching the steps you need to take to create a sound retirement plan, I'm finding this is more complex than I thought - lots of possible plan designs and levers I could pull. Among the components:

Creating the right bucket portfolios (short, medium, long-term) to produce cash flow for expenses, mitigate risks, ensure a high success probability <-I think the bucket idea is simply a type of mental accounting. Cash flow? No. Sustainable withdrawals, yes. If you have a reasonable withdrawal rate, it will have a high success rate.
Best process of rebalancing Once a year.
Tax planning, now and after RMD's start (defer to age 70)
Are Roth conversions the right move Depends on taxes and plans for inheritance.
When to take Social Security Wait until at least 66 if possible.
Longevity annuity? Maybe, need additional information to answer this.
Covering healthcare costs under son-of-Obamacare until age 65. Need more detail. HSA?
Long Term Healthcare provision (long term care insurance versus self-fund) Separate discussion[/list][/list]

in looking at where I am, I'm evaluating how I can get help on this, beyond everything I can do on my own. I'm considering using an advisor. I have researched various advisor options and spoken to a bunch of people. My options range from using a fee-only planner to do point-in-time comprehensive plans, to using something like Wealthfront to help manage investments, all the way up to paying a fixed fee or percent of assets-under-management for both comprehensive planning and ongoing investment management. Seems to me that both the "planning" and "execution" part of this is important; one feeds the other, and it needs to be monitored for the inevitable changes that will occur.
Wealthfront may be a good option. And don't forget, you don't have to put all assets under paid management. Your portfolio does not have to be complex, but we really need to see what and where things are to help with that.

My question to fellow Bogleheads: How do you evaluate whether such an cost (for me it would range from $10k-$50k/year) makes sense? The do-it-yourselfer in me says don't spend the money, keep it simple, you can get 80% of the way there on your own. But the thing that scares me is how each of these components interact with each other; pull one lever and it impacts everything else.
Yes, every decision involves some sort of compromise.

I'm very analytical, I understand more than the average bear, but I have an uncomfortable sense that this is exceeding my knowledge and that I need someone with more knowledge and especially experience to get this right. I doubt I would make a huge mistake with all this, but it might save me money in the long term to get a really good advisor. A lot at stake.

OK, you are looking for confirmation. As I mentioned at first, it does seem like a scary task with your entire quality of life riding on what you do. I also felt that way, but it disappears rather quickly.

Perhaps you're where I am today, or a few years down the road. How did you consider this decision? How did you determine whether it was a cost worth incurring? My simple thinking is that it's like subtracting 0.1-0.5% from my returns, and I've been totally fixed on low costs...BUT, there's the other side of what sound planning and execution could SAVE me in the long run when you look at the whole picture.

Would be very interested in others' experience and thoughts.
Thank you.

I think you should consult with a pro, but first go through the routine here to help with what you need to focus on with the planner.

re: Longevity annuity, was just thinking that it's one way to mix in some guaranteed income once I'm older; of course the tradeoff is the lost potential appreciation. Always less expensive to use your investments to make it work.

re: Health Care, I'm thinking specifically about (1) having to get insurance via Obamacare or it's descendants until we're 65, and (2) figuring out how to cover Long Term Care insurance when we're older. The latter is sort of a cloudy picture given the problems with the insurance suppliers and their business model, and the emergence of the Hybrid life insurance/LTC policies. I have lots of homework to do on that one.

Have checked out Wealthfront. At this point I'm less concerned about establishing a reasonable portfolio mix and staying the course with disciplined rebalancing than I am with the combination of taxes, cash flow, IRA conversions, trying to minimize RMD taxes, etc...a true puzzle.

I looked into Garrett. Few people in my area (Connecticut) are in the network. Looked into Napfa also, but very few seem to be true fee only advisors where I get get only what I need (their business model is ongoing asset management).

Meanwhile I just rebalanced, am at 65 stock, 35 bond and cash with 3-4 years of liquid assets to cover expenses. Definitely feels like the market's overvalued to me but who knows. For me, at this stage, I really have to shift my thinking from accumulation to careful preservation.

carolinaman wrote:You seem to be very knowledgeable and thoughtful about your finances and retirement plans. I was in a similar position a few years prior to my retirement although my net worth was considerably less than yours. I was confident of managing my finances but I felt paying a really good planner for a retirement plan and advice would be well worth it because retirement was an irreversible decision, and I did not want to screw it up. One of my fears is that I might have tunnel vision about aspects of my planning and a good planner would spot that and make recommendations to remedy it. I am talking more about a CFP type of planner than an investment adviser, someone who can advise on comprehensive retirement things beyond investments like LTC, estates, tax considerations, et al.

I recommend that you engage a fee only planning, someone you are confident can provide the advice needed. Once you establish the relationship, you may find the need to consult with this person again on similar matters, but I do not think you need ongoing advice or an AUM type arrangement.

FWIW, I did a detailed retirement plan with Fidelity which was good for the investment side, but never found a financial planner I was comfortable with to do a comprehensive retirement plan. One mistake I made was taking SS at FRA rather than delaying to 70 which I could have easily done. At the time, there was not a consensus about delaying SS to age 70 as there is now, although had I been a Boglehead in 2010, I might have avoided that mistake.

Thanks for your comment. It's the tunnel vision that concerns me. I did the financial plan exercise with Vanguard, some helpful hints but not nearly as comprehensive as what I feel I need at this point.

Can you guys please help me? I am 40 with only 1M with 401K,529,Taxable, looking for a fee only per hour advisor. I can only afford $200/hr for max 2 hours. How to find a advisor? here are questions I wrote up after reading this thread. can u guys chime in please?

0. If you are trying to sell me products like portfolio-managment for 1% or commissions or insurance product, let's end this call NOW!!!

1. Are you a fiduciary in heart and in writing ?

2. Do you have CFP ? additionally, CFA or CPA ? How many clients do you have now? Your AUM ? DFA Fund access ?

6. Do you have remote technologies to share screens with remote client ?

7. Do you offer comprehensive financial planning? What is your fee?

8. What software do you use for Planning? Goal based like MoneyGuidePro ? or CashFlow based like eMoney Advisors?

9. What is your hourly fees for yearly retainer reviews ?

10. Who are your preferred brokerage? Who are you preferred custodians?

11. How you share your cell phone with clients for emergency $ matters?

12. Do you like Technology? Robo (Betterment or WealthFront) ? Robo-Human ( Vanguards VPS or Schwab-Intelligent)

The first thing I would do: given that you're only 40, am I correct in assuming that you're years away from retirement? If so, it's all about crafting the right portfolio for long-term growth, balancing your current needs and what you'll need in the future...and that depends upon your personal income statement (are you living on salary only, or do you pull from investment income)? What is your risk tolerance? Again I don't know your situation, but the first thing is to look at some really basic sample portfolios (go to Marketwatch and search for "lazy portfolios," take a look at the standard recommendations in Fidelity and Vanguard, look at Paul Merriman.com and you'll find a WEALTH of good information. In short I would say be sure you've educated yourself on the basics, and then see if you really need an investment manager at all. From reading this blog, those still in the accumulation phase have done it themselves and figured out that simple is better - for a host of reasons.

I would go back and re-read Jane Bryant Quinn's latest book How to Make Your Money Last. Under no circumstances would I pay for assets under management. Delaying SS is better than any annuity currently available in the market. The time while retired and delaying SS is a good time to make Roth conversions for many.

While I am a pretty committed do-it-yourselfer, a couple years prior to retirement my wife and I hired an adviser to do a one time plan. I was certainly concerned with the "you don't know what you don't know" prospect and, in addition I wanted to encourage my wife to be more involved in the ultimate decision as to when we could retire. I felt the one time plan accomplished both goals and I have no regrets regarding spending the money.

I also do business with Schwab. The financial planner assigned to me offered to do a plan for my wife and me shortly after I retired and I was pleased with that effort as well. One aspect that the Schwab plan addressed was Roth conversions, something we did not ask the adviser we hired to look into.

Using i-orp and the Retiree Portfolio Model calculators I have since refined the Roth conversion plan somewhat.

It's complicated. LONG
Bought my first stock (Recommendation of older bro) at age 15 by walking into one of brokers with many names. It was not a custodial or UGMA.
Later, my older bro told me about MM funds (mid 70s, think about Pres. Ford's time). He was working at the FED.
A decade later, my supervisor (part-time with Waddell&Reed) approached me about IRAs and stock mutual funds. 8.5% upfront. Thank you, Don, for helping me understand MF and DCA . I moved personal MMkt to personal Fidelity' s Magellan and Growth&Income (another cue from older bro.) I watched WSW with Louis Rukyser, fairly regularly but had no idea how to purchase since my brother's first mention of Mmkt until Waddell' s presentation. We were just not into it as an investor.
Then when our son was about 3yo, late 80s, a car pooler, bent my ear with term insurance (ALWilliams) and converted our WL ins to term and invest the difference in one of their MF.
In 2002, I called the Primerica agent to sell us term ins for our college bound son. The agent also told us about LTCi. Our IRA s with WR and Primerica and personal Fidelity funds had grown substantially and it made sense to have LTCi. I looked around for LTCi but other companies were offering less, for less money.
Early 2008, I began to see problems and wanted to "hedge" our retirement. My older bro, now at big commercial bank had a very worried demeanor on his visits to see Mom (I was caregiver and bouncing between my home with in-laws in their late 80s and Moms home). Primerica agent introduced us to VAs, and I spent 4 months investigating other alternatives including leaps. Saw many annuity presentations, asked a lot of questions. Finally bought a bunch of High Fee'd, GLWB VAs, in late Nov 2008 when the DJI was about 8000, and our paper loses were in a few hundreds$K, and we "had" planned to retire in 2009-10; which we did but not by choice.

All is well now. See liner notes below.
FinancialAvisor doesn't have all our wealth but he does get kudos reaching out to us, for patience in teaching us and earning peanuts in the early days. He has the LTCi, and annuities. I took remaining AUM MF into my personal trading accounts which are now entirely discretionary and comprise ~20% of wealth.
I discovered that LTCi was not marketed by Fidelity in our time. I discovered that GLWB VAs were not marketed by Fidelity or Vanguard in our time. I tried. The Merrill Lynch, SmithBarney,Morgan Stanley never offered their services early on. I did stop by in recent years at, ML, EJ, Ken Fisher, and another fiduciary firm. They now want my business (wealth management) and would only do business with us if they had the whole pie.

IMO, DYI is preferred if you have some knowledge in what you want and need. Some financial products need some outside guidance, if anything to compare products and options. . However, what you don't know, you don't know. KnowHow, KnowWay. You have to be able to say No or Yes. Critically question all known choices. Look for New alternatives:mrgreen: and own your decision. Blame no one.

There's more but, in story telling, I always leave them wanting more. $$$$
YMMV

carolinaman wrote:You seem to be very knowledgeable and thoughtful about your finances and retirement plans. I was in a similar position a few years prior to my retirement although my net worth was considerably less than yours. I was confident of managing my finances but I felt paying a really good planner for a retirement plan and advice would be well worth it because retirement was an irreversible decision, and I did not want to screw it up. One of my fears is that I might have tunnel vision about aspects of my planning and a good planner would spot that and make recommendations to remedy it. I am talking more about a CFP type of planner than an investment adviser, someone who can advise on comprehensive retirement things beyond investments like LTC, estates, tax considerations, et al.

I recommend that you engage a fee only planning, someone you are confident can provide the advice needed. Once you establish the relationship, you may find the need to consult with this person again on similar matters, but I do not think you need ongoing advice or an AUM type arrangement.

FWIW, I did a detailed retirement plan with Fidelity which was good for the investment side, but never found a financial planner I was comfortable with to do a comprehensive retirement plan. One mistake I made was taking SS at FRA rather than delaying to 70 which I could have easily done. At the time, there was not a consensus about delaying SS to age 70 as there is now, although had I been a Boglehead in 2010, I might have avoided that mistake.

Thanks for your comment. It's the tunnel vision that concerns me. I did the financial plan exercise with Vanguard, some helpful hints but not nearly as comprehensive as what I feel I need at this point.

Vanguard did a retirement plan for me when I transferred some funds to them. It was really an investment plan that was pretty generic. I think to get a bonafide retirement plan you will need to hire a CFP. Best wishes.